From Bronzeville to South Shore, tenants allege that living in 312 Real Estate buildings is ‘hell’ | Evening Digest
It took a weekend for a sewage backup to be cleaned up. Several weeks for the property manager to respond to texts about a broken back door. For other problems—mice “flying out the walls”; broken doors, lights, and security cameras; mold; garbage in the alleys—tenants allege months came and went with no fix from owner and manager 312 Real Estate.
312 Real Estate, a real estate company owned by Ariel and Raphael Lowenstein, has expanded rapidly through south lakefront neighborhoods since 2014. Records compiled and analyzed by the Herald show that 312 has spent at least $51 million on approximately twenty residential properties between Bronzeville, Kenwood, Woodlawn and South Shore, with more than half of that amount spent in the last two years alone.
But their building management has not kept up with their property acquisitions. Across eight different buildings, 10 tenants told the Herald about their experience moving into a 312-owned building or living in a building that 312 took over, alleging structural, plumbing, security or rodent issues, which some said were affecting their health; unresponsiveness from management about urgent issues; and difficulty relocating from 312 buildings due to the tight rental market.
The Herald previously reported that during the eviction moratorium, 312 began a full interior gut rehab at a former cooperative building on Drexel Boulevard while there were still residents and children on the property.
312 Real Estate did not respond to the Herald’s repeated requests for comment, for this story or the previous one. When reached at the company’s South Loop office on July 22, Ariel Lowenstein acknowledged receiving the Herald’s requests for comment and said he would not respond to questions on the record.
“The moment I stepped in, there were seventeen things that were wrong with it,” said Kamiah Dabney, referring to her garden unit at 4320 S. Michigan Ave., where she lived from January to October 2021. This was the third 312 property she had lived in.
A broken fridge and broken oven were the most immediate issues, she alleged. She also noted that the building doors were often jammed or broken, allowing nonresidents to come into the building at any hour of day.
One month after Dabney and her boyfriend moved in, the apartment started flooding. She counted four floods in three weeks. They went to stay in a hotel for most of February and deducted the cost from the next month’s rent.
Later that year, on October 16, sewage backed up into the unit, coating the floors of her apartment. Dabney provided footage of videos from both the sewage backup and the February floods to the Herald.
From Saturday until Monday, Dabney said she couldn’t get a hold of owners Ariel and Raphael Lowenstein, who she said can only be reached via cellphone. (312 does not have an online platform for tenant service.)
“My shower just backed up and apparently Dennis is off until Monday,” Dabney texted to the Lowensteins at 3:42 p.m., along with a video of the backup. “I thought he was the emergency plumber? Why is this not communicated to the tenants on who to contact since neither one of you answer your phones either.”
“Dennis is refusing to come and the situation is getting worse,” she wrote at 4:53 p.m. “Y’all are terrible.”
Her boyfriend cleaned up what he could before they eventually got a call back from 312 on Monday, Dabney said.
Dabney had experienced delays in emergency work orders before, but not like this. “I had lost my everlasting mind,” she said.
Records from the Department of Buildings (DOB) suggest that 312 management were informed and aware of the unit’s potential to flood when Dabney moved in.
According to the DOB inspection reports, the building had experienced flooding issues in its garden unit for at least two years prior to Dabney’s arrival. 312 bought the building in June 2015, according to city permits.
On May 13, 2019, a city inspector found that there had been a sewage backup in the rear basement units due to an obstructed floor drain. They ordered the company to replace the drain and to employ a licensed and bonded plumber. As of press time (July 27, 2022), the complaints remain unresolved according to the DOB data portal.
The obstructed floor drain wasn’t the only issue city inspectors identified. The building failed six of the eight inspections conducted since 312’s purchase of it in 2015. (The building had failed the previous five inspections under prior ownership as well.)
A building inspector came by the building again on January 21, 2021, just two days after a 311 complaint was called in. The inspector noted cracks and splitting treads in the rear porches, furniture obstructing the porch landings, exposed wires, rat holes and burrows throughout the lawn, broken foyer doors, broken locks and one totally unsecured apartment.
312 did not respond to repeated requests for comment about the code violations.
Dabney said she hadn’t wanted to move into the garden unit. But the building she had been living in, at 4400 S. Drexel Blvd., had just been bought by 312 in October 2020. (This was the second time this had happened: In 2018, Dabney moved out of the condo she rented at 4525-37 S. Drexel Blvd. after 312 bought out the building and allegedly raised the rents by $600.) Ariel Lowenstein was knocking doors every week telling tenants that they had to leave so they could renovate the building, she alleged.
Because this occurred during the COVID-19 eviction moratorium, which closed eviction courts and prevented landlords from removing tenants from their apartments, “I told them I wasn’t leaving the building,” Dabney said.
Lowenstein allegedly offered to reimburse several months of rent if she transferred her lease to a unit in a different 312 building—the six-flat at 4320 S. Michigan Ave.
She was wary of 312’s management from the past two apartments she had lived in, but she needed a place to stay, and it seemed promising that the apartment was under renovation. So she signed the lease. But her anxiety returned when the leasing agent wouldn’t let her look at the apartment before she moved in, Dabney alleged. “Now I know why they didn’t let me see it,” she told the Herald.
Several blocks over, on 47th Street and King Drive, a tenant had similar allegations about being relocated to a substandard building. The tenant, who wished to remain anonymous because she was still living on the property, said that 312 had bought out the condo building she had previously rented from. After allegedly refusing to fix the floor, where the tenant said the concrete was pushing up the tiles, 312 offered to move her to a different building.
“It’s rehabbed, I’m thinking it’s going to be a nice building,” she said of the stately twin greystones, 4706 and 4714 S. Martin Luther King Jr., Dr., which 312 bought together for $230,000 in 2016.
But the property was in poor shape, she alleged. “He won’t give us dumpsters, the trash is overflowing. The mail’s not coming because the mail lady can’t get in.”
She said she and her neighbors worry about water damage and mold, especially for the several tenants who live with small children.
A February 2021 inspection from the DOB notes water leaking through the wall and into the interior of the ground apartment. She provided the Herald with a video of what appeared to be a stream of water coming through the ceiling in an adjacent apartment.
The issues came to a head earlier this year when the hot water went out and there was no fix for a week, she said. She stayed at a hotel so she could shower.
“We do not have an emergency line if something happens. If someone is locked out, if someone’s water is out, there’s no response until the next business day,” she said.
“I have no hot water, Ari (Ariel Lowenstein) sends me to voicemail,” she added.
“It’s not just this building, this is a pattern for him,” she alleged.
It’s not clear who exactly the Lowensteins are or how they scaled up their real estate company so quickly. A website post about Raphael Lowenstein says that he moved back to Chicago to start 312 after graduating from Washington University of St. Louis’s Olin School of Business in 2014. Ariel, meanwhile, worked as a leasing agent at ICM Properties, Inc., and then spent a summer as a financial planning and analysis intern at Pangea Properties in summer 2016, according to his LinkedIn page. Pangea is another rental company that scaled up rapidly, buying up buildings in Black South and West Side neighborhoods during the foreclosure crisis. Pangea has gained notoriety for its poorly maintained buildings and for being the city’s number one evictor—taking more tenants to eviction court than the next four landlords combined, a 2019 analysis by Maya Dukmasova for the Chicago Reader found.
Through an analysis of property records, the Herald was able to identify the Lowensteins’ first property acquisitions in 2014: two brick three-flats in South Shore, one at 7025 S. Chappel Ave. and the other just off the lakefront, at 3064 E. Cheltenham Pl. They bought the Chappel building for $72,000, and the second from foreclosure auction (the price is not listed on the Recorder of Deeds).
At both, they secured permits for renovation and alteration the next year, and resold both properties by 2019.
These were purchased under Lion Cub Enterprises LLC, which is independent of but shares a Skokie address with 312 Real Estate LLC, which the Lowensteins would use to buy other properties in subsequent years. As is common practice in real estate, the acquired property would then be transferred from 312 Real Estate LLC to an LLC specific to the building (such as 4711-15 S Michigan Properties LLC), which protects the company’s other assets in the case of a building-specific lawsuit.
Their next buildings remained on the smaller side, three-to-six-flat buildings in Bronzeville and Kenwood, purchased either from foreclosure auction or longtime individual owners. Dabney’s 4320 S. Michigan Ave. building was one of those: they bought the building along with the adjacent parcel for $256,000 from auction. (312 is currently building a four-story, eight-apartment building, on the adjacent parcel, according to city permits.)
Then, in 2017, the numbers started to get bigger. They bought the first of their condo buildings, the troubled Drexel Commons Condo at 4627-37 S. Drexel Blvd., in 2017, for a combined $6,402,500, according to a Herald analysis of deeds. This was the first building that Dabney lived in that was taken over by 312.
312 then started acquiring larger rental buildings, some of them in some level of physical distress—like 4520 S. Drexel Blvd., one of dozens of South Side apartment buildings that had been bought up by EquityBuild, the real estate investment company later revealed to be running a Ponzi Scheme. And 4400 S. Drexel Blvd., the second building that Dabney lived in. 312 bought this courtyard building from DC-based NOVO Properties for $3,650,000.
“The new owners plan a gut renovation of the property [4400 S Drexel] and will reposition it to attract young urban professionals who have been flocking to the area,” NOVO Properties partner Jamie Glascott wrote in a press release on the sale.
In the last three years, however, 312 has zeroed in on collectively owned buildings, buying out condo owners in several Woodlawn, South Shore and Bronzeville apartments. Last March, they purchased the historic Tudor Gables cooperative housing building on Drexel Boulevard in Kenwood for $11.5 million, the most they’ve spent on any one building.
Dabney might well have been one of those young urban professionals that Glascott said 312 was seeking to attract to their renovated courtyard building at 4400 S. Drexel Blvd.; the recent college graduate was working in a PR firm, having moved to Kenwood from her childhood home in the suburbs in order to live closer to friends.
For her, the experience with 312 has ruined management companies altogether; she told the Herald she will no longer consider renting from one. She now rents a unit in the area from an individual.
But with the growing crisis of affordability on the south lakefront, compounded by the tight rental market, many longtime residents feel stuck in substandard housing.
Another tenant who requested anonymity because she still lived in a 312 building said she had only moved into her Bronzeville apartment last year as a last resort. She had wanted to move further east in Bronzeville to be closer to her mother and to be in a safer area. But she wasn’t sure about the apartment. ”I turned it down several times because I was real iffy about it,” she told the Herald.But then it started getting cold, and she hadn’t found another unit in her price range, and so she moved in.
“I was really upset because when I moved in there they told me they wanted a $500 move-in fee. It was filthy. It took me a whole day to clean each room, it took me two weeks to really deep clean — a bucket of scalding hot water on the floor with bleach and Pinesol,” she alleged.
Underneath the bleach, she said, “it’s a really, really nice apartment, but things are starting to break down”—like the broken or disconnected pipe that she alleged prevents her from taking a bath without flooding her downstairs neighbor’s bathroom. A fix she requested in November 2021 still has not been made. In the meantime, she said she has patched the holes in the walls that the mice got in through on her own. “They’re not doing anything, they’re not fixing anything.”
In another Bronzeville building, Aretha Mitchell was preparing to move out when she reached out to the Herald in late June of this year. A nurse, Mitchell moved herself and her son to her current 312 unit at 4758 S. Michigan Ave. seven months ago, seeking cheaper rent. They moved her to an apartment on a different floor at the last minute, she said, which “was a mess, it was ridiculous.” After experiencing the building conditions and management she’s looking to leave, she told the Herald. “This is hell what I’m going through.”
“There’s garbage slung all in the back of the alley, trash be everywhere,” Mitchell said.
But her chief complaint is the mice; like nearly every tenant who spoke with the Herald, Mitchell alleges an ongoing problem with rodent infestation. And visit from the exterminator did nothing, she said.
“It’s very sad if you have property and there are mice flying out the walls,” she said. “This right here is just the worst. I’m out of here. Moving out.”
For Kamiah Dabney, the tenant who lived in three 312 units, the takeaway about the growing rental company is clear. “They expanded on the South Side… You come in raising the rent $600? You come in evicting people during an eviction moratorium in the middle of a pandemic? You’re taking advantage of people,” she said.